Exports suffer as shipment costs soar

10:36 a.m. EST, June 30, 2012|Mohamad El Amin, The Lebanon Daily Star

BEIRUT — Soaring shipment costs are wreaking havoc on agricultural exports as local demand plummets, said heads of Lebanon's agricultural associations Friday, warning they would resort to nationwide protests if the government fails to act by next week.

"[Agricultural exports] have stagnated and are not exceeding 20 percent of what is needed [to shore up the sector]," said Ibrahim Tarshishi, head of the Union of Agricultural Associations, in a meeting held in Rayak, Bekaa.

Tarshishi urged the government to cancel all regulations on foreign refrigerated trucks, vital to exporting summer fruit produce to Gulf Cooperation Council markets.

He said local truck owners have been taking advantage of the Syrian crisis and have raised shipment fares to unprecedented levels. "At the current shipment fares export becomes unprofitable," he said.

The number of local refrigerated trucks is not sufficient, he added. "We need some 100 refrigerated trucks every day, while those available [locally] do not exceed 20."

The same view was echoed by Antoine Howayek, head of the Farmers Association, who told The Daily Star that fruit exports to the GCC, have been particularly hard hit on a three-fold increase in refrigerated shipment costs.

"While last year a refrigerated truck [to GCC markets] would cost $1,500, the rates now are in excess of $5,000," he said, highlighting that higher costs take a big toll on the competitive advantage of Lebanese fruits.

The Lebanese government regulates the entry of foreign refrigerated trucks to Lebanon and in many cases requires a pre-entry permit. Trucks with an empty load are not allowed entry to Lebanon.

While government subsidies paid by the Investment Development Authority of Lebanon -- IDAL used to cover up to 50 percent of the shipment costs, the ratio has now fallen to insignificant levels, Howayek complained.

"IDAL now gives LL40,000 per ton for cherry exports to Saudi Arabia. A container would receive a total of LL750,000, less than 10 percent of shipping costs," he said.

For both Tarshishi and Howayek, a solution to the export crisis lies in facilitating sea shipping routes, particularly to countries with geographical proximity to GCC markets.

"The only solution is to have ferries transport trucks to Egypt and Jordan," said Howayek, praising a recently opened ferry line between Tripoli, Lebanon, and Mersin, Turkey, as positive for exporting to the less-important Iraqi and European markets.

The tense security situation and a sharp decline in tourism have also added to farmers' woes, both Tarshishi and Howayek noted. "Tourism used to contribute significantly in vending agricultural produce, particularly in the summer season," Tarshishi pointed out.

Howayek added that wholesale prices of summer fruits including cherry, apricot and peach have fallen by 50 percent on the local market compared to last year.

"We will wait until next week, but if the government fails to meet our demands we will call for a nationwide strike and will dump produce on the street," Tarshishi said, highlighting that the demands do not entail any significant costs for treasury

In a recent interview with The Daily Star, Agriculture Minister Hussein Hajj Hasan said his ministry would soon establish a disaster fund for the agriculture sector, half of which is to be funded by the government. He said the ministry was looking for new markets to replace declining agricultural exports, particularly to Syria, where an uprising has now entered its 15th month.